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It took more than nine months of lobbying and debate since they expired, but the short line tax credit legislation has been given new life. On Oct. 3, the House adopted a revised fiscal markets stabilization bill — aka the "economic rescue bill" — which included a two-year extension of the short line tax credit legislation, or Section 45G. President Bush signed the bill into law the same day, according to the National Railroad Construction and Maintenance Association Inc. (NRC).

The tax credits, which expired on Dec. 31, 2007, now expire on Dec. 31, 2009. Qualified railroad track maintenance expenditures made in 2008 are eligible to earn credits. In addition, the bill "fixes a longstanding issue by allowing the credit to be used by railroads that pay the Alternative Minimum Tax," the NRC said.

Section 45G provides a 50 percent tax credit for infrastructure rehabilitation on Class II and III railroads, up to a cap of $3,500 per year per track mile owned. Because short lines and regionals own about 50,000 miles of track, the credits will prompt about $340 million in track rehabilitation spending annually, providing small railroads about $170 million in tax credits per year, the association said.

"This is a great victory for the short-line industry and its contractors, suppliers and shippers," NRC officials said in a legislative update. "By once again attracting a huge number of Congressional supporters early in the effort, we were able to keep the extension amendment included in every relevant piece of tax legislation considered by Congress this year."

Although the extension “does not cure our infrastructure short fall,” it marks another substantial step toward short-line infrastructure rehabilitation, says Adam Nordstrom, a partner in Chambers, Conlon & Hartwell L.L.C. — which lobbies on behalf of the American Short Line and Regional Railroad Association — who played a key role in attracting co-sponsors to the tax credit extension legislation.

“Based on the tremendous support we have enjoyed from 45 senators and 249 representatives this last go round, and the relationships that short lines, customers, contractors and suppliers have forged with their members of Congress, I am certain we will be able to generate strong support for our next [extension] effort, he says.